SoundCloud Will Match Streaming Royalties On Its Platform

 

SoundCloud will match 100% of the streaming royalties generated on its platform for independent creators, the company announced, doubling the artist’s payout. The initiative, dubbed Fan-Powered Friday, is timed to celebrate the one-year anniversary of SoundCloud instituting its fan-powered royalties program, wherein independent creators on SoundCloud get paid based on the number of users who stream their music, rather than their market share of total streams.

Fan-powered royalties was launched last spring by SoundCloud as a way to help creators on the platform earn a greater share of revenue from their actual fans, and underpins a significant chunk of the company’s new strategy as it morphs from an indie-centric user-uploaded streaming hub into a distributor offering tiered label services for artists who want to grow within the SoundCloud system. By allocating subscribers’ dollars in this way, SoundCloud execs say, artists and their teams get access to deeper insights into who their fan base is and how to reach them, allowing for both a deeper connection between artist and fan as well as more direct marketing and commercial opportunities.

As part of the announcement, SoundCloud released several figures supporting the first year of FPR, noting first that 135,000 independent artists are monetizing on the SoundCloud platform, a 30% increase over the number from March 2021. (While many artists and creators on SoundCloud are signed to labels, SoundCloud’s pre-existing licensing agreements typically mean that those artists cannot shift to the FPR model without a renegotiation of the deal, meaning FPR is currently available mostly for fully independent creators.)

SoundCloud also says that artists have earned 60% more in streaming revenue from FPR than from the pro-rata market share model of streaming payouts, with artists from smaller, more niche scenes — the company points to Tribal House and Neo Soul as two genres in this category — have earned twice as much revenue. In addition, fans contributing more than $5 to one artist — wherein their share of listening over-indexes to that degree — jumped 97%, according to the company.

Fan-powered royalties, and other user-centric models of streaming payments, have been debated in the business for several years, but haven’t been enacted on a wide scale, though Deezer and Tidal have both said they were exploring the idea. Some industry observers believe that switching to the model would merely be redistributing the same money in a way that wouldn’t move the needle for most artists, but SoundCloud has identified FPR as not just about how streams are being monetized and paid to creators, but as a key to unlocking more value for artists and their teams.

“It changes streaming from what today is just accessing a catalog of music into truly more of a community platform,” SoundCloud CEO Michael Weissman told Billboard about FPR in January. “We can provide an enormous amount of information back to artist managers and major labels to actually get at the heart of this, which is, ‘Who are the 10,000 people who are my true fans? That over 30% of their listening time is going to that artist?’”